Editor's letter

Giving up is not always the right option, especially for investors chasing money they invested in structured products issued by Lehman Brothers. The news that a surprising proportion of Asian investors who bought the products will get much of their money back is very welcome, with public pressure and subsequently government influence ensuring that the distributors of these bonds will provide more compensation to more people than had been expected. There was also better news last month from Europe, particularly Switzerland.

While it had been reported before the end of last year that Credit Suisse would buy back Lehman structured products from those it had distributed them to, at the time it seemed entirely possible that the investors involved would receive mere peanuts from the Swiss bank. But the doubters were wrong - at least in part - as became clear last month (see this issue's News section), when it was revealed that many of the bank's smaller retail customers (those with less than SFr500,000, the equivalent of $438,000) will get their capital back. The only loss they stand to suffer is the opportunity cost of investing elsewhere, and in today's market that 'loss' is more than bearable. In fact, getting any money back will put many of these investors in a better position than their investor peer group.

At the same time, it would appear that investors in the US are moving in a similar direction, albeit slowly. To the rallying call of lawyers who have been marketing their wares to all and sundry in the hope of a juicy class action, the only substantial target is UBS, which had the dubious honour of hitting the $1 billion mark in sales of Lehman structured products. The relatively small size of the losses, and the fact that the US government currently has more important financial market business to attend to, could mean that it is left to these lawyers to make the case for the impoverished investor. Sadly, the only certainty for US investors in the products at the moment is that it will be some time before any resolution is forthcoming.

richard.jory@incisivemedia.com

+44 (0)20 7484 9802.